Ireland's New Prime Minister on the Way Forward

Until the recent election one party, Fianna Fáil, had been in power for fourteen years. What’s it like to lead a party change during such a tumultuous time?

It’s been like a tornado really in the last eight weeks. The ending of the general election campaign, the formation of the new government, and unveiling the economic challenges that the country faces. Abraham Lincoln used to say, tell the people the truth and the country is in safe hands. I see a number of priorities. To unearth the scale of the economic challenge in [Ireland] has taken some time. No government in the history of our State faces the scale of the economic challenge that I face, and yet there has never been a time of better opportunity to deal with certain things that are wrong with our country, and that’s what we are about.

So we want to set about demonstrating that we are serious – a new government with a different set of priorities – no messing here. We want to end the confusion and provide certainty. That’s why we have made decisive decisions about the banks. That’s why we are focusing investment in jobs as a priority. And that’s why we are dealing with a restoration of good health to our public finances.
This is not easy. There are challenging times ahead for our people. But Irish people have always been pragmatic, and when they understand the scale of the challenge, they want and are willing to have a government leading them to sort these things out.

What decisions have you made about the banks?

We had six dysfunctional banks. We went through a series of very strenuous stress tests, and the government decided to have two pillar banks, Bank of Ireland and Allied Irish Bank. We are following that with a whole series of issues about governance of banks. Those who have been responsible before will remove themselves or be removed, and we will ask the people in a referendum to give us the authority, through parliamentary inquiry, to determine the facts of what actually happened in many of these cases.
What about the thoughts of some global financial leaders that Ireland is going to default?

I don’t accept that. The exchequer returns released yesterday for the end of April show that in the four major areas of tax – excise, VAT, corporate tax, and income tax – we are running $600 million ahead of target. That’s an indication of confidence. It is not the end result that we want, because we are locked into a bailout deal with the IMF (International Monetary Fund) and EU (European Union), but within those constraints that’s an indication and a demonstration that we can meet our targets and that we will meet our targets.

And I’ve made this point on so many occasions: we want less money from Europe but greater flexibility. And the big challenge for the government is to get to a point where we can go back to those bond markets as a country and borrow money at less interest rates and wave goodbye to the IMF and be in charge of our economic destiny again. And that is a challenge that we will not shirk, that we will not turn our backs on.

Do you think you will be able to hold on to the low corporate tax rate?

Yes, I do. This is a matter of national competence. When President Sarkozy was president of the council before the second Lisbon referendum, he made it clear and it was added in as a declaration to that Treaty, that tax is a matter of national competence and that remains the case. Ireland will not be moving from its 12.5% percent corporate tax rate. We will play our part by other decisions in measuring up to our challenges in the European sense, and we have made that very clear to our European colleagues, with whom we have good working relationships and we will continue to do so in the future.

Aside from political change, what do you think can be done to improve the national psyche right now?

I think the fact that the people had their say in a general election and decimated the previous government was a lancing of that boil and that frustration. I think we have taken a series of decisions about reducing ministerial pay, about taking away state cars from people, about limiting the spending in elections, about putting an end to corporate donations. On the bigger decisions where we are moving decisively to deal with banks, our economic problems and our job creation
programs – we are continuing our drive to ensure confidence by providing a jobs initiative so that it is going to be easier for employers to take on new employees, to remove obstacles by way of tax restrictions on employment.

We are showing people that we are delivering on the mandate that they gave to us. And that is the most encouraging and the most confidence-building measure that we can take to influence the national psyche. And in that sense, our Irish diaspora, both in the States and Australia and around the world, are in constant contact with our country. Our exports have been running at a surplus for the last 21 months. We have very many of the global leaders [corporations] working in our country.
So what we are doing now is directing our attention at stimulating our indigenous economy. We have a very high savings ratio – people were afraid to spend money because they saw no certainty for the future. We are going to provide that certainty and encouragement for people to get back spending. There’s great value now for construction, for tourism or for investment. So while it is a challenging time, it is also a brilliant opportunity to change the structure of the way government actually delivers for its people and the way it supervises the effectiveness of public monies being spent for the provision of services – get on and demonstrate that we are lean, efficient and forward thinking. So through this austerity program – through the end of it – I see the sun on the far shore and better times ahead.